Response Case 57824
QUESTIONNAIRE: LIST OF QUESTIONSAND ANSWERS
We have given the answers in italics under each question.
Please specify the name, address, telephone and fax numbers of the contact person in charge of the reply.
Company: / Financial Services Association(Finansnæringens Servicekontor)
Name: / Tor Johan Bjerkedal / Telephone: / + 47 23 28 43 52
Position: / Head of Bank and payments department / Fax: / + 47 23 28 42 01
e-mail:
Address :Hansteensgate 2, Oslo
Company: / The Norwegian Savings Banks Association (Sparebankforeningens Servicekontor)
Name: / Jan Digranes / Telephone: / +47 22 98 66 41
Position: / Head of Payment Systems Departement / Fax: / +47 22 36 25 33
e-mail:
Address :Universitetsgaten 8, Oslo
- Legal and operational framework
- Please explain how your scheme is organised and indicate in particular whether it is open for membership to independent financial institutions (“open system”)or not (“closed system”).
Finansnæringens Hovedorganisasjon (Norwegian Financial Services Association) and Sparebankforeningen i Norge (Norwegian Savings Banks Association) are the two associations for banks operating in Norway. Membership in Finansnæringens Hovedorganisasjon automatically brings along membership in Finansnæringens Servicekontor, just like membership in Sparebankforeningen i Norge brings along membership in Sparebankforeningens Servicekontor. In both instances the servicekontorer (service bureaus) are separated from the two associations as separate legal entities only for tax reasons. Both associations/service bureaus are based on the principle of optional membership.
The Norwegian national card scheme (BankAxept) is owned jointly by the two service bureaus–Finansnæringens Servicekontor and Sparebankforeningens Servicekontor. The BankAxept card scheme covers both POS and ATM transactions.
The BankAxept scheme is an ”on line to issuer” scheme and is 100 % PIN based.
The generalBankAxept rules are jointly set by the banking board of Finansnæringens Servicekontor (Bransjestyre bank og betalingsformidling) and the board of Sparebankforeningens Servicekontor. The rules are currently in transition from rules set in 1997(last altered in 2003) to new rules set in 2004, but not yet put into force. These rules are enclosed (enclosures 1.1.1 and 1.1.2).
Banks in the BankAxept schememust comply with the scheme’s general rules, but operate themselves, independently of each other, both as issuing and/or acquiring banks in the market. Each individual bank set their own prices and service levelstowards their own customers in competition with the other banks in the scheme.
The general rules empower Bankenes Standardiseringskontor (The Banks Standardisation Office) to decide specific mandatory operational standards and security requirements. Bankenes Standardiseringskontor is a separate legal entity (association) established by Finansnæringens Servicekontor and Sparebankforeningens Servicekontor. The articles of association for Bankenes Standardiseringskontor is enclosed (enclosure 1.1.3)
Bankenes Betalingssentral AS (BBS) operates through its division BBSPos the central switch for authorisation requests for POSBankAxept transactions from acquiring bank to issuing bank. BBSPos also generates the transaction data for clearing and deliver these data to both acquiring bank and issuing bank for crediting and debiting retailers and cardholders accounts respectively. This operation in BBSPos is run according to a framework agreement between Finansnæringens Servicekontor and Sparebankforeningens Servicekontoron one side and BBS on the other. All banks participating in the BankAxeptscheme have given their explicit written consent to this framework agreement.(In the new general rules off the scheme, which not yet is put into force (enclosure 1.1.2), the tasks that are to be operated by one operator are laid down in § 16.). The participating banks sign separate agreements with BBS for operational services provided by BBSPos and also pay directly to BBS for these services according to prices set by BBS.
BBSPos also provides stand in authorisation (STIP) for BankAxept POS transactions for the individual issuing bank and on behalf of the issuing bank. The issuing bank sets its own parameters that are to come into function when stand in processing is required.
The ATMs in the BankAxept scheme are operated by individual banks. For ATM transactions there is no central operational switch for authorisation requests. However, for the switching of authorisation requests from acquiring bank (ATM bank) to issuing bank, a joint software program must be used. This software program (BALTUS) is owned by Bankenes Standardiseringskontor. There are no fees paid for the use of this program.
All banks with operations in Norway can participate in the BankAxept scheme, whether they are Norwegian banks, branches of foreign banks or banks that conduct business in Norway on a cross border basis.However, for the time being, there are no banks which participate in the scheme on a cross border basis.
According to the Norwegian payment systems act § 3-2 providers of payments services must notify the payment system to the Financial Supervisory Authority of Norway (Kredittilsynet). The act was put into force in 2000. As scheme owners of BankAxept, Finansnæringens Servicekontor and Sparebankforeningens Servicekontorgave such notification in 2000.
Please identify the company(ies), association(s) or other structure(s) that participate in the organisation, management and operation of the network, including wholly or partly owned processors, and indicate the legal status and ownership structure for each of them.
Finansnæringens Servicekontor / Association
(for financial corporations, commercial banks, and insurance companies) / Members
Sparebankforeningens Servicekontor / Association
(for savings banks) / Member banks
Bankenes Standardiseringskontor / Association
(for banks) / Finansnæringens Servicekontor and
Sparebankforeningens
Servicekontor constitutes the supreme agency
Bankenes
BetalingssentralAS
(division BBSPos) / Limited company / Banks operating in Norway
(Ownership structure – enclosure 1.1.4)
Individual banks / Commercial banks or savings banks
Processors for banks
(Data centres) / Usually limited companies / Largest (and dominant processing centre in Norway is EDB Business Partner ASA, which trough a holding company, is owned by Telenor (telecom)
Nordea Bank Norge ASA makes use of the processing centre for the Nordea corporation in Sweden.
Fokus Bank ASA runs its operations through its parent banks (Danske Bank) processing centre in Denmark.
85 small savings banks run their operations trough SDC in Denmark.
1.2.Please further specify how the following functions within your payment network are allocated among different company(ies), association(s) or other structure(s) (hereafter “entities”).
Management of the brand / Finansnæringens Servicekontor and
Sparebankforeningens
Servicekontor
Card production / The individual issuing banks can choose among a number of competing card production companies. The card companies personalising cards must comply with security measures ser by Bankenes Standardiseringskontor.
POS sales / Retailers can choose to purchase POS terminals among several competing suppliers.
Also individual banks compete with other suppliers in offering POS terminals for retailers to buy. There is no precondition from acquiring bank that terminals must be bought from the bank. Whether the terminals are bought from banks or other suppliers, the terminals and the system operating the terminals must comply with standards and security measures set by Bankenes Standardiseringskontor.
POS rent / Retailers can choose to rent POS terminals among competing suppliers. Also individual banks offer POS terminals for retailers to rent. There is no precondition from acquiring bank that terminals must be rented from the bank. There is no precondition from acquiring bank that terminals must be rented from the bank. Whether the terminals are rented from banks or other suppliers, the terminals and the system operating the terminals must comply with standards and security measures set by Bankenes Standardiseringskontor
ATM installation and operation
(on-site or off-site*) / The individual banks are responsible for the ATMs they operate. Banks can choose from different suppliers
-of ATMs
-offering processing services for ATMs
-offering maintenance for ATMs
-offering filling of cash
Issuing cards / The individual banks
Acquiring merchants / The individual banks
Setting rules for card issuing,
merchant acquiring, ATM installation
and operation / General rules are set by Finansnæringens Servicekontor and
Sparebankforeningens
Servicekontor.
Standards and security measures are set by Bankenes Standardiseringskontor.
(refer answer to q 1.1)
Setting rules for card payment
processing, authorisations / General rules are set by Finansnæringens Servicekontor and
Sparebankforeningens
Servicekontor.
Standards and security measures are set by Bankenes Standardiseringskontor.
Each individual bank processes the authorisation and actual transaction from or into its own customers accounts according to rules set by the bank itself, (refer answer to q 1.1)
Setting rules for payment settlement, interest payments, fee payments / Each individual bank based on its own strategy towards the market and its own pricing policies.
Setting message standards / Bankenes Standardiseringskontor
Setting security standards / Bankenes Standardiseringskontor
Processing payment/withdrawal authorisations / The individual banks
Processing of payments / withdrawals / The individual banks
Clearing of payments / For POS:
BBS (BBSPos) provides transaction data to both issuing and acquiring bank. The debiting and crediting of card holders and retailers accounts is conducted by the individual banks through their general data processing service providers.
BBSPos also sends transaction data to the interbank clearing system (Norwegian Interbank Clearing System – NICS) which generates the clearing between the banks on a net multilateral basis.
For ATMs:
The individual acquiring bank provides transaction data to the individual issuing banks. The acquiring banks also send the transaction data to the interbank clearing system (Norwegian Interbank Clearing System – NICS) which generates the clearing between the banks on a net multilateral basis.
Settlement of payments / For POS:
The individual acquiring bank settles the payments that the bank has acquired by crediting the retailers’ bank accounts. The issuing bank settles the cardholders’ payments through debiting accounts to customers the bank has issued cards to.
Settlement between banks is done either in the central bank (for approx 30 banks holding settlement accounts with the central bank) or through a bank (holding settlement accounts with the central bank) and operating as a settlement bank for other banks. (The crediting of retailers accounts or debiting of cardholders accounts is independent on whether the bank settle in the central bank or through another bank.)
For ATMs:
The issuing bank settles the cardholders’ payment trough debiting accounts to customers the bank has issued cards to.
The issuing bank settles with the acquiring bank either trough settlement accounts in the central bank or trough a bank with a settlement account with the central bank. The settlement is conducted on the basis of the net multilateral clearing (between banks) done by NICS.
Switching of authorized requests / For Pos:
BBS (BBSPos), see answer to q 1.1
For ATMs:
Through infrastructure network based en software program owned by Bankenes Standardiseringskontor, see answer to q 1.1
Switching of stand in authorization / For POS:
BBS (BBSPos), see answer to q 1.1
For ATMs:
If issuing banks processing centre cannot be reached, the acquiring bank may offer stand in processing. The actual requested amount for withdrawal is checked against limits written in the cards mag-stripe three. If sufficient limit, the withdrawal takes place and the acquiring bank (the ATM) reduces (rewrites) the limit written in mag-stripe with the amount withdrawn.
Billing of fees / Billing of fees towards customers isoutside the scope of the BankAxept scheme. Thus the billing of customers (cardholders and retailers) is done by the individual issuing and acquiring banks. Usually customers’ fees are debited the customers’ accounts according to the price the individual bank has set towards the individual customers (both cardholders and retailers).
In the BankAxept scheme there are no fees to be paid by participants to scheme owner (Finansnæringens Servicekontor and
Sparebankforeningens
Servicekontor). Neither are there any fees to be paid from participants to Bankenes Standardiseringskontor. Although in the distribution of the costs of running Bankenes Standardiseringskontor(paid for by banks) there is an element which relates to the relative number of BankAxept cards issued by the individual banks.
Collection and redistribution of fees / For collection of fees, se answer above.
In the BankAxept scheme there is no redistribution of fees levied on costumers among participants in the scheme. For use of ATMs there are interbank fees, see answer to q 10.
Accounting / The individual banks.
Auditing / Bankenes Standardiseringskontor audits that standards and security measures are upheld.
Statistics / BBSPos,Finansnæringens Servicekontor and Sparebankforeningens Servicekontor, Bankenes Standardiseringskontor, the individual banks and the central bank
Other, please explain
*e.g. in railways stations, airports, supermarkets.
1.3.Please describe the relationship between the entities mentioned in your reply to question 1.2. andyour paymentcard network and explain in particular how theseentities participate in the decision making process of your network in case of decisions such as changes to procedures, fee structures, liabilities, etc.
As for the relationship between the entities, we believe the descriptions given in answers to questions 1.1. and 1.2. provides sufficient information.
Decision making process:
General BankAxept scheme rules
The general BankAxept scheme rules are jointly set by the banking board of Finansnæringens Servicekontor (Bransjestyre bank og betalingsformidling) and the board of Sparebankforeningens Servicekontor.
Decisions regarding the general BankAxept scheme rules made by the above mentioned boards are based on advice from a joint Payments Systems Committee (Fellesutvalget for Betalingsformidling) withrepresentatives from member banks both from Finansnæringens Servicekontor and Sparebankforeningens Servicekontor. The members of this committee are appointed by the two mentioned boards (five members each). BBS (BBSPos) is not a member of this committee, neither is BBS (BBSPos) an observer in the committee.
Changes to procedures
Changes to procedures which relate to, or has a consequence for, standards or security measures are dealt with by Bankenes Standardiseringskontor. In Bankenes Standardiseringskontor such proposals are discussed in different committees depending of the nature of the proposal. Members of these committees are bank representatives. If changes to standards are to be made, proposals are sent out to all banks for comments. Changes in standards are decided by the board of Bankenes Standardiseringkontor. This board consists of the same members as Fellesutvalget for Betalingsformidling. If it turns out that the proposed change will require a change in the general BankAxept scheme rules Bankenes Standardiseringskontor brings the case forward to Finansnæringens Servicekontor and Sparebankforeningens Servicekontor. The matter is then handled according to the procedure mentioned above.
Fees structures
Each issuing bank is free to charge cardholders individually set prices. Accordingly each acquiring bank is free to charge retailers individually set prices. Thus,the banks prices (fees) towards costumers are matters of the individual banks and not of the boards or committees involved with common questions related to the BankAxept scheme.
The fees (pricing) structure of the agreed joint operator (at present BBSPos) is a matter decided upon within the general BankAxept scheme rules. This is to ensure that each bank covers the costs that incur related to its own costumers choice of service and use of the service.
Liabilities
The participating banks obligations and rights are laid down in the general BankAxept scheme rules.
The question of liabilities between banks participating in the BankAxept scheme (if obligations are not observed) is regulated in a separate “Rules of regulating liabilities between banks in payment services” (Alminnelig regelverk om ansvarsregulering mellom banker ved betalingsformidling). These rules are enclosed (enclosure 1.3.).
1.4.Please explain the technical structure of the network (independent IT platform accessed by all members, interconnection between members, hub and spokes...) and specify whether communications and processing are conducted on the same platform or on separate platforms.
For POS (see enclosure 1.4.)
Suppliers of terminals and terminal systems run such systems on a variety of technical platforms. They all technically communicate with systems run in BBSPos, either trough the APACS40 interface or the SDI (ISO 8385) interface. After processing in BBSPos’ STEPS and BBSPos’ BaxBis (technical administration system for retail outlets) the authorisation request is passed on to the technical system of the individual banks choice. The individual banks choice of system/processor to handle authorisation requests related to its own cardholders is outside the scope of the BankAxept scheme. Nevertheless, EDB Business Partner processing centre in fact receives all authorisation requests from BBSPos and channels these to the different processing centres of the individual banks which technically run the customers accounts where the actual authorisation is done.
For ATM:
For ATMs the technical structure is in principle based on interconnection between banks. As mentioned under 1.1 theinterconnection/communication makes use of the same software program(BALTUS). The actual technical interconnections are much fewer than there are banks. This is due to the fact that many banks technically operate within the same processing centre.
1.5.Please draw up diagrams which indicate the interaction and relationship of the different entities in a typical POS and a typical ATM transaction. Please also indicate in these diagrams all fees paid between the entities engaged in such transactions (from the initiation of the transactions to the clearing and settlement, be it fees paid between banks or by banks to you as network operator or to other entities engaged in processing etc.) assuming a transaction value of 50 €.
For POS, see enclosure 1.5.1. For ATM, see enclosure 1.5.2.
Both for POS and ATM the fees are independent on the amount of the transaction. To our knowledge this is also the case for fees set by banks toward customers (both retailers and cardholders).
1.6.How is processing of transactions organised in your scheme? Please describe to what extent processing is carried out by the network and by individual members. Please explain any differences for domestic vs. cross-border card payments.
We believe that this question is answered through our answers to the previous questions.
Within the BankAxept scheme there are a limited number of retailers acquired abroad. Especially in Sweden, close to the Norwegian boarder. These transactions are also in Norwegian kroner and are processed in the exact same way as if the retailer had been located in Norway.